1. All expenses of an entity are classified as either distribution costs (selling expenses) or administrative expenses under the function of expense method. 2. The only difference between the function of expense and the nature of expense methods is the presentation of "cost of goods sold" under the function of expense method. 3. The main difference between the function and the nature of expense methods is the segregation of operating and non- operating items under the function of expense method.

1. All expenses of an entity are classified as either distribution costs (selling expenses) or administrative expenses under the function of expense method. 2. The only difference between the function of expense and the nature of expense methods is the presentation of "cost of goods sold" under the function of expense method. 3. The main difference between the function and the nature of expense methods is the segregation of operating and non- operating items under the function of expense method.

Accounting (Text Only)

26th Edition

ISBN:9781285743615

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter15FSI: Financial Statements For Mornin' Joe International

Section: Chapter Questions

Problem 3DQ

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Question

-PROBLEM 1: TRUE OR FALSE
1. All expenses of an entity are classified as either distribution
costs (selling expenses) or administrative expenses under the
function of expense method.
2. The only difference between the function of expense and the
nature of expense methods is the presentation of "cost of
goods sold" under the function of expense method.
3. The main difference between the function and the nature of
expense methods is the segregation of operating and non-
operating items under the function of expense method.
4. Freight-in is presented as distribution cost under the function
of expense method.
5. PAS 1 requires an entity to provide additional disclosures
when it uses the nature of expense.method.

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